What is Social Enterprise?

The Kentucky Social Enterprise Alliance chapter was chartered in March 2015. We are an emerging group of entrepreneurs, philanthropist and community leaders who see social enterprise as a catalyst for change and innovation that will effect our communities. Please feel free to join our next meeting or conference call and network with other innovators in Kentucky. (https://socialenterprise.us/chapter/kentucky/)

Social enterprise can be challenging to define, in large part because the concept has been evolving rapidly in recent years and increasingly blurs the lines of the traditional business, government and non-profit sectors.  

Social Enterprise Alliance suggests the following basic working definition:

A social enterprise is an organization or initiative that marries the social mission of a non-profit or government program with the market-driven approach of a business.

In recent years, traditional non-profits have become more entrepreneurial and interested in generating earned revenue to supplement charitable contributions, while traditional businesses have begun to integrate greater levels of social responsibility and sustainability into their operations. The growth of social enterprise is a reflection of this convergence and helps fill the void between traditional approaches that have focused singularly on creating either social impact or financial returns.    

Is Social Enterprise New?

Yes and no. There are examples of social enterprise that are more than 100 years old, but social enterprise is relatively new as a growing sector of activity in the U.S. and beyond.

For example, Goodwill Industries pioneered the notion of “a hand up, not a handout” in 1902 when they began employing the poor to mend and repair used goods that could then be resold to the general public or provided for free back to the poor. Still today, Goodwill aims to provide economic self-sufficiency and in 2014 created employment and job training opportunities for more than 2 million people while generating more than $4.6 billion in revenue – 86% of its total budget – through retail sales and other earned income sources.   

In recent years, social enterprise has become more prominent, with growing interest and attention from investors, consumers, universities, media and policymakers. The rise of “impact investing” and “conscious consumerism” are reflective of social enterprise’s development as a field, as are the growing number of university courses, the attention from Forbes and other mainstream media, and government support through the White House’s Office of Social Innovation and Social Innovation Fund.   

What Is the Role of Social Enterprise in Addressing the World’s Problems?

Social enterprise is not a silver bullet, but it is a promising approach to fulfilling unmet needs and fostering genuinely “triple-bottom-line” organizations. It’s certainly not the only solution, but it is most definitely a solution.

• For traditional non-profits, social enterprise can be a powerful complement to other activities when it advances the social mission and the financial sustainability of the organization.
• For new start-ups – non-profits and for-profits – social enterprise gives entrepreneurs the ability to bake social impact and financial sustainability into the organization’s DNA from its outset.
• For traditional businesses, social enterprise initiatives enable a company to integrate social impact into business operations and prioritize social goals alongside financial returns.

What Are Some Examples of the Problems Social Enterprises Are Tackling?

One of the most interesting and exciting aspects of social enterprise’s evolution is the growing variety of issues being addressed by social enterprises. Today, social enterprises are disrupting markets across every industry and tackling social challenges throughout every corner of the world. A few representative examples include:

• Grameen Bank, which makes small loans to the poor for small business development and other uses. Since its inception in the 1970s, Grameen has provided $10 billion in loans to more than 10 million people, and has proven the need and viability for financial services to the poor.  Grameen received the Nobel Peace Prize in 2006 as a reflection of its efforts and success.
• Greyston provides the homeless employment in a bakery that makes brownies for Ben & Jerry’s ice cream. As Greyston says, “we don’t hire people to bake brownies, we bake brownies to hire people.”
• D.Light designs affordable solar-powered devices that provide an option to people that lack access to reliable energy sources. In its eight-year history, D.Light has sold more than 10 million solar lamps, improving the lives of 50 million people.
• Dispensary of Hope aggregates prescription medications that are nearing their expiration date and redistributes these drugs to free clinics in low-income communities. Clinics pay Dispensary of Hope a monthly subscription fee that covers basic expenses, and drug manufacturers save money by avoiding costs associated with destroying expired products.
• TerraCycle upcycles packaging and other non-recyclable consumer waste, keeping it out of landfills and turning it into new products. Today, Terracycle has established a recycling network of more than 31 million consumers and 100 major corporate brand partnerships, resulting in more than 3 billion units of garbage averted from landfills and transformed into new, 100% recycled products.
• Benetech develops and uses technology to create positive social change. One of Benetech’s signature programs is Bookshare, the largest literacy resource for people with disabilities. Before Bookshare, only 5% of printed materials were accessible to people with disabilities. Today, Bookshare’s more than 330,000 subscribers have access to more than 300,000 titles in a variety of accessible formats.
• Warby Parker sells fashionable eyewear to customers in developed markets, and makes a contribution to VisionSpring for each pair sold that enables access to affordable prescription glasses to people in developing countries who are otherwise functionally blind. So far, this partnership has distributed nearly 2.5 million pairs of glasses to those in need.

These are just a few of the tens of thousands of social enterprises that today are addressing important social needs with an approach that has the potential to be efficient, effective and financially sustainable.